Insurance and ERM: Some Global
Trends
Craig Thorburn
Lead Insurance Specialist, The World Bank
Policy Advisory Consultant, CGAP
cthorburn@worldbank.org
+1 202 446 6826
Skype: craig_thorburn
• Several institutions and organizations do
surveys. Two recent ones:
– North Carolina State University (Compares
a wide range of types of entity, focused on
the USA)
– Deloitte (A smaller group and only financial
institutions only, but global)
• Presenter experience from discussions
with insurers and insurance supervisors.
2
My first question…
Why do you have the
amount of capital
that you have?
The answer will tell
you how well your ERM
is working..
3
Not yet where we want to be
• ERM increasingly a business necessity based on actual
experience
– “65% of enterprises, more larger entities or public companies,
admit they were caught off guard by an operational surprise”
– Only 25% of respondents consider they have a complete formal
ERM in place (unchanged)
– 52% indicate ERM is yet to be viewed as a strategic advantage
• Boards and external stakeholders (through interest in greater
disclosure) are pressing senior management to be more
engaged. Close to half of respondents have internal ERM
oriented risk committee at senior management level who meet
at least quarterly.
• Although only 32% of surveyed entities have a designated CRO,
this is far more / most likely for financial services entities.
4
Adoption and Maturity of ERM: Percentage of Respondents
Full
Sample
Largest
Entities
Public
Cos
Financial
Services
Not-forprofits
No ERM process in place
24
7
7
13
26
Partial ERM in place addressing some but not
all risk areas
30
39
37
33
30
Complete formal ERM in place
25
44
48
42
19
Maturity of ERM – Robust
4
11
9
9
2
- Mature
19
25
30
25
15
- Evolving
35
41
39
40
34
- Developing
23
15
14
20
25
- Very immature
19
8
8
6
24
5
Adoption and Maturity of ERM: Percentage of Respondents
Full
Sample
Largest
Entities
Public
Cos
Financial
Services
Not-forprofits
- Extensive
14
26
25
19
11
- Mostly
27
34
40
29
24
- Somewhat
27
26
23
27
33
Combined
68
86
88
75
68
Designated individual serving as CRO
32
49
50
56
22
- Reports to CEO
46
44
45
52
43
- Reports to Board / Board Committee
32
28
34
32
18
- Reports to CFO
13
18
13
10
216
Boards asking for increased senior
management engagement is
Factors mostly or extensively leading to increased senior
executive focus on risk management activities: Percentage
of Respondents
Full
Sample
Largest
Entities
Public
Cos
Financial
Services
Not-forprofits
- Regulatory demands
33
47
49
63
25
- Unanticipated risk events
32
45
44
35
30
- Emerging best practices
33
39
39
50
34
- Emerging corporate governance
requirements
32
49
50
51
25
- Boards of director’s requests
31
51
48
31
26
7
Risk Inventories and Assessments: Percentage of Respondents
Full
Sample
Largest
Entities
Public
Cos
Financial
Services
Not-forprofits
33
53
57
47
25
28 / 29
48 / 49
46 / 47
43 / 42
19 / 17
- Not at all
33
12
10
18
43
- Annually
34
39
36
38
36
- Semi-annually
10
12
14
10
9
- Quarterly
15
25
29
22
6
- Monthly or more frequently
8
12
11
12
6
Maintain enterprise wide risk inventories
Guidelines to business line leaders on assessing
risk (probability / impact)
Frequency that inventories are updated
8
Particular regulatory directions
• ORSA
• Requirements for risk tolerance statements,
risk management policies and processes…
– ERM seen as a way to turn risk management
obligations into core business value add (even if
not yet fully in place)
• Capital management policies, and risk based
capital and supervision approaches.
9
Key themes …
• Regulatory drivers
• Business drivers – governance etc
• Reactions to having had a bad
experience
• Just plain good ideas
10
Concluding comments
11